Interest rates on these loans start at 8.9 per cent
When faced with a financial crisis, many turn to unsecured debt such as personal loans or credit cards to meet their requirements.
However, a personal loan is best avoided, as interest rates are far more expensive than loans backed by assets. Unsecured loans should be the last resort – opt for these only after exhausting all other sources of generating funds, including secured loans against gold holdings or insurance policies. You can also consider liquidating your financial assets to fund your immediate needs before taking a personal loan. Interest rates on unsecured loans are likely to be higher than the returns your investments can generate. Ideally, you must have an emergency fund, which is capable of taking care of at least six months’ household expenses, in place to tide over financial emergencies.
Public sector banks offer the cheapest interest
If you have no other fall-back option, however, ensure that you shop for personal loans carefully after scrutinising offers from various banks. As per data from Bankbazaar.com , Union Bank of India offers the lowest interest rate of 8.9 per cent on a personal loan of Rs 5 lakh with a five-year repayment tenure. Punjab National Bank (PNB) is close on its heels with 8.95 per cent. If you were to apply for personal loans from these two banks, your equated monthly instalments (EMI) will work out to Rs 10,355 and Rs 10,367 respectively. Public sector behemoth State Bank of India (SBI) charges an interest rate of 9.6 per cent on its personal loan. Not surprisingly, eight out of the top 10 banks with lowest personal loan rates happen to be public sector banks.
Only two private sector banks – HDFC Bank and Kotak Mahindra Bank – figure in this list, with personal loan rates starting at 10.75 per cent.Interest rate and charges on Personal Loan for all listed (BSE) public and private banks are considered for data compilation. Banks for which data is not available on their website, are not considered. Data collected from respective bank's website as on September 18, 2020. Processing and other charges are assumed to be zero for EMI calculation; Interest and charges mentioned in the table are indicative and may vary depending on bank's terms and conditions.